Seasonal demand and online retail volatility – are ‘pop-up’ warehouses the solution?
The online market is highly seasonal – demand is not constant, with discernible peaks and troughs over the course of the year. In this extract of our report, Future Gazing: Logistics – The Last Mile, we look at the opportunities of temporary warehousing to cope with seasonal consumer demand spikes
2 minutes to read
In November 2018, around 21.6% of all retail sales were online, compared to a year-round average of 18%. December accounted for the second busiest online month (19.8% of retail sales in 2018), and October also tending to be slightly above year-round averages.
Seasonal demand
The lulls in online demand are slightly more difficult to identify. There is inevitably some cooling in the post-Christmas period, with January and February seeing considerable drop off in online trade. Likewise, the summer months of July and August generally see lower online penetration.
The demand spike in November is undoubtedly driven by Black Friday. In its native US, Black Friday is the day after Thanksgiving and therefore always a public holiday. As such, it remains largely a store-based event.
In the UK, it is a normal working day, so it invariably lends itself more to online retailing. Although most retailers jump on the Black Friday bandwagon to some degree, the two largest product categories by far are electricals and toys.
This throws other variables into the wider multi-channel / urban logistics equation – temporary warehousing to cope with seasonal demand spikes.
The rise of the pop up shop
Pop up shops are gaining in prominence, what chance ‘pop up warehousing’? Or ‘warehouse space sharing’ amongst individual retailers or third party logistics firms, with those for whom Black Friday / Christmas doesn’t represent their peak demand period (e.g. B&Q, Homebase, Carpetright etc) subletting warehouse (or indeed retail floorspace) to those for whom it most definitely is (e.g. Dixons Carphone, Argos, John Lewis etc?). And the latter returning the favour come Easter and the May Bank Holidays?
Online Seasonality – Monthly Trends
Source: ONS, Mintel, Knight Frank
Of course, as yet this is largely unexplored territory, but is another example of need driving demand, with fluidity and flexibility the underlying concern.